This report summarizes one of a series of workshops organized by RAND's Critical Technologies Institute, on behalf of the U.S. Department of Education, to take advantage of the experience of those already implementing new technologies in the schools. The workshop consisted chiefly of dialogues with educators and experts from the private sector who are working to apply emerging telecommunications systems for learning. This summary addresses questions on educational software development and serves as a primer on the market realities of the educational software business. Participants concluded that the market is weak for several reasons: schools have little money to spend on software; it was not always clear that educational materials dollars could be spent on instructional technology; manufacturers often shy away from the lengthy review processes and long-term commitments that many states require; and production values tend to be lower for school multimedia than for the more glamorized multimedia marketed for the home computer. In this regard, the advantages and disadvantages of the integrated learning system (ILS) are outlined. Besides being limited, the educational software market seems too unsettled to be accurately analyzed. The market is currently being driven by technological achievements for their own sake, but as people become more and more receptive to computers, the market will become propelled by consumer demand. In the meantime, school budgets for software remain: (1) controlled by only a few key figures; (2) too low; (3) tied to outmoded premises about learning; (4) concentrated on the elementary grades; and (5) subject to rising expectations placed on them by the visual sophistication of home "edutainment" software. An appendix lists the participants. (BEW)